Minimum Wage Hike Could Cost One Million Jobs, CBO Reports

President Obama's plan to raise the federal minimum wage from $7.25 to $10.10 an hour would result in the loss of half a million to a million jobs, according to a report of the non-partisan Congressional Budget Office released Tuesday.

The proposed increase, which the president exhorted the Congress to pass in last month's State of the Union address, would be a 40-percent hike over the current minimum over a three-year period, reaching the targeted figure of $10.10 in 2016.

The job loss projected by the CBO would mean between 0.3 and 0.6 percent of the workforce would be added to the unemployment rolls. The report acknowledges the uncertainty of its estimate of future job losses. "As with any such estimates, however, the actual losses could be smaller or larger; in CBO's assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1 million workers," the report says.

Debate on the measure could begin in Congress as early as next month. Democrats generally support the measure, while yesterday's report adds fuel to the opposition already expressed by Republican leaders.

"This report confirms what we've long known: While helping some, mandating higher wages has real costs, including fewer people working," according to a statement issued by Brendan Buck, a spokesman for House Speaker John Boehner. "With unemployment Americans' top concern, our focus should be creating, not destroying, jobs for those who need them most."

A statement put out by Sen. John Thune of South Dakota, chairman of the Senate Republican Conference, echoed the concern that an increase in the minimum wage would increase joblessness in a time of unusually high-levels of long-term unemployment. "More than 3.5 million Americans have been unemployed for six months or longer, and the percentage of Americans in the labor force is at a low we haven't seen since Jimmy Carter was president," Thune said. "It's time to give lower- and middle-income workers a break, not hammer them with more bad policies."

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